How to Buy a House Using Redfin: Purchasing a Home Using an Online Brokerage with Commission Refund

The following is a guest post from Houston, Texas real estate developer and entrepreneur Tracy Suttles.

Redfin, the first major online real estate brokerage, was founded in 2002. The company first began to offer homes for sale online in 2006, using a business model that particularly benefits consumers. According to their corporate website, the brokerage has completed more than $1.5 billion in home sales and has been favorably reviewed by 97% of customers who ranked the company (redfin.com).

This unusual real estate company was profiled on NPR Marketplace. However, here we provide calculations that demonstrate when dealing with Redfin makes the best financial sense, as well as a general description of how this brokerage works.

What Makes Redfin Unique

The major difference between Redfin and other real estate companies is how agents are paid. In many brokerages, buyer’s agents are paid by commission. That is, the real estate agent who helps a potential buyer find their new home is paid a percentage of the purchase price of the house. Usually, the sellers are responsible for paying the commission.

Redfin agents, in contrast, receive a salary. Therefore, the commission paid by the seller’s agent is not given to the buyer’s agent (a Redfin agent). Instead, in major metropolitan areas, the brokerage keeps 50% of the commission and refunds 50% of the commission to the buyer (however, the minimum fee the company charges a seller is $5500). This rebate is not taxable, and, in some cases, the rebate money can be applied to closing costs on the new house (redfin.com).

According to redfin.com, the company has refunded almost $100 million as of 2017.

Why Buy a New Home Using Redfin

Redfin’s commission rebate policy is very attractive and can help homebuyers save a significant amount of money; the exact sum saved depends on the price of the house purchased (see below). In addition, their online database gives potential buyers access to extensive data (Multiple Listing Service, or MLS listings) about properties for sale — including tax records, whether a property has been re-listed, and previous sale prices — that are usually only available to real estate agents.

Home buyers use the database to identify properties they are interested in, and can schedule private showings online. When a potential buyer is ready to make an offer on a home, the buyer chooses a Redfin agent who then guides the offer process. This business model has been very successful because, according to the company website, “When you come to Redfin having already done your research, our agents can focus on serving you, not selling you”.

Why Redfin May Not Be the Best Option

Although Redfin agents generally have excellent customer service ratings, according to the company’s website, they are by definition more ‘hands-off’ during the first stages of a potential buyer’s search for a new home. In fact, much of the background work involved in finding a suitable house, such as identifying comparable properties in a single neighborhood, is completed by the buyer, not the agent. The fact that Redfin’s well-organized, detailed real estate database is accessible by buyers makes this possible.

Therefore, a potential buyer may not have any contact with the online brokerage’s agent until the buyer wishes to make an offer on a property. Buyers who want guidance in all parts of their search for a new home may choose a more traditional real estate brokerage.

Calculating the Redfin Commission Refund: Will a Buyer Always Get a Rebate?

The brokerage’s website states that “clients who buy and sell through a Redfin agent can save $20,000 in commissions”. However, it is important to note that the amount of money a client may save will depend on:

  • Location: In major metropolitan areas such as Boston and San Francisco, Redfin gives 50% of the commission paid by the sellers to the buyers. However, in other locations, they refund just 15% of the commission. In addition, the typical commission paid by the sellers varies. For example, in Boston the typical commission is 2.5% (of the purchase price of the house), while in many other areas the typical commission is 3%.
  • Home Price: Redfin sets a minimum fee of $5500. How does this affect the commission rebate? Suppose a house in the Boston area is sold for $360,000. In Boston, a typical commission is 2.5%. Therefore, the commission Redfin receives from the sellers for this house would be $9000. Because of their minimum fee, the brokerage will keep $5500 of the commission and give just $3500 to the buyers. Clearly, the more expensive the house, the larger the commission rebate.

Based on this data, will a client always receive a commission rebate from working with Redfin? Not always. For example, if Redfin keeps $5500 as a minimum fee, then buying with this company would not yield a rebate if the house was bought for $220,000 in a region with a typical 2.5% commission, or approximately $183,000 in a region with a typical 3% commission, because $5500 would equal the entire commission.

Online Brokerage a Good Choice for Hands-On, Motivated Home Buyers

Redfin is an excellent choice for home buyers interested in taking a hands-on approach to finding a new home. The 50% of commission rebate model gives home buyers a powerful incentive to work with this innovative brokerage. The very high customer satisfaction enjoyed by Redfin speaks to the professionalism of their agents and the overall success of their business model. However, not everyone who buys a house using this online brokerage may save a significant amount of money through the commission rebate.

Petroleum Problems

I try to make it a point to avoid the news. Beyond whatever headlines catch my attention when I log on each day, I ignore the reports of hardships and sorrows the world over. I have enough right here that I fail miserably at dealing with, I really don’t need to try to take on the rest of the world’s problems. Even when I was told that BP turned away aid from others, I chose to be silent in my dissatisfaction. Enough is enough though.

I owned my own business, I understand that, in order to maintain any business, one must be cost efficient. The bigger the business, the more decisions must be weighed against the good of the company verses over-all good. If the company fails, there is more than the owners or shareholders out of a livelihood. When it comes to a business involved in current technology, such as the fuel for the cars Americans cannot figure out how to use responsibly, decisions have more variables to consider. The same people who are complaining about protecting the wildlife, are going to be complaining later about the high price of the fuel they use to get to their rallies. It becomes imperative to weigh the effects of cost and time through the course of normal business.

But there is also a responsibility in conducting business. It may have been legal for me to put whips and chains in the front window of my lingerie store located in a small town with Southern sensibilities, and it may have even been good for business with the kinds of secret lives people lead, but it wouldn’t have been a good choice. It likely would have made me more money, if only because controversy creates advertisement, but it would not have served the greater good of the community itself.

Maybe it’s easier for one person to make a good choice than it is for a corporation like BP. There are a great many people who have to think like-minded all at once, which is often a problem in any environment. Corporate responsibility, not that of the corporation itself, but the responsibility of each individual within the corporation to the corporation, can cloud judgment. The individual finds themselves attempting to adhere to a set of corporate objectives that were written, not for a specific situation, but to cover many different types of decisions. Often those include a primary objective of being fiscally responsible. Even safety is more about not increasing the company’s insurance over insuring the health and well-fare of it’s individuals.

Perhaps that is why the officials at BP made such serious errors in judgment. IN spite of several quotes from various records revealed throughout the investigation, the problems of this spill cannot be laid upon one person. We all know that one person can stand up against what they know to be wrong, and can risk their job-their family’s well-being-to do the “Right” thing. That’s a tough call to make, and in this uncertain economy, a dangerous one.

So who is responsible then? The company. Just like H & S and Wal-mart being held responsible for the destruction of unsold seasonal clothing several months ago, I am holding BP directly responsible for this disaster. There should be no question of cost; absolutely everything that can be done, should be done to rectify this situation. If they cannot, the American government should step in, even inviting known terrorists to participate in this clean up if they are available and willing. Life isn’t nice and neat; sometimes you have to lie with the enemy to serve a greater order.

Serving the greater order also means holding others responsible for their actions. There is sure to be no end to the twists and turns revealed in the investigation, and it is just as probable that it will be continued beyond necessity. I have seen enough myself to have assurances that the company British Petroleum, neglected reasonable suggestions by individuals with appropriate knowledge, contributing to the current disaster. They are also unwilling to accept this responsibility as well as unable to resolve the issue. The American government should immediately stop all BP drilling on American lands and give them a set time to remove their drilling equipment before confiscation. Will this create a diplomatic issue? Only if the British government decides to be unreasonable. BP is a company, not a country.

Not that I expect the US government to take my advice. I do, however, expect the American people to do so. Our government is only as good as the individuals who support it. If you continue to purchase anything from BP, you are supporting their position. Do you really believe they are doing their best effort to clean up their mess, or do you think they are trying to save their butts? Do you believe they could have prevented such a catastrophe by listening to the advice of their own people, or do you support fiscal responsibility above the environment? There is a balance to all things, but that doesn’t mean it is always even. The scale has been tipped in a way I find unacceptable, and I intend to do something about it instead of just complain. What’s your stand?

How To Sell Your Home Using Feng Shui: How Ancient Chinese Philosophy Could Increase Property Sales

The following post is a guest post from Houston, Texas area real estate developer and entrepreneur Tracy Suttles. Tracy can be best contacted for questions, comments and concerns on Twitter at @tracydsuttles.

However, economic problems aside, the reason that some houses are struggling to sell could be down to other reasons. Homeowners with “for sale” signs at the moment might benefit from putting into practice some of the principles of feng shui in their properties. Perhaps the energy in the house is being blocked in some way? – the principles of feng shui could help address this balance enabling a vendor to sell their home more easily.

What is Feng Shui?

Feng shui or “foong shway” as it is pronounced in Mandarin, means “wind, water”. It is an ancient Chinese philosophy based on the relationship between humans and the environment. Underlying the practice of feng shui is the belief that we and the environment we inhabit are sustained by an invisible yet tangible energy known as “chi”.

A devotee of feng shui must observe the flow of “chi” and recognise the areas in which energy has become trapped or where too much has gathered in order to create space for “chi” to move freely. If “chi” is allowed to stagnate it can have a negative effect on our fortunes. By freeing this energy we can enhance all areas of our lives, from our homes and relationships to our wealth and good fortune.

Do The Sellers Really Want To Move to a New House?

According to the principles of feng shui, if a house owner is struggling to sell their home this may have occurred because there is a blockage of energy somewhere in the house, which is putting off potential buyers . Homeowners need to ask themselves whether, deep down they are reluctant to move house.

By harbouring doubts about moving home owners may be unknowingly creating an energetic lock which could block the sale of the property. It’s inevitable that house owners will feel emotionally attached to their home, especially if they have lived in the same house for a long number of years. However If they really want to make that sale they need to move on in order to encourage the positive flows of energy within their property.

Bring Positive Energy Into Specific Areas Around The Home

Sellers need to get feng shui savvy, and using a compass focus on the following areas in the house:

  • North West: This area represents helpful or supportive people. This should facilitate deal making, especially your estate agents’ ability to make a sale. Put grey objects or objects featuring the number 6 in this area.
  • South East: This area represents wealth and prosperity. By placing chimes or crystal here – anything that moves light or sound – this can help the estate agent work better for you.
  • South: This area represents fame, fortune, celebrity and attention. Use fiery objects which are red or feature the number 9. Make sure the area is clean and decluttered. Doing this will remove any potential buyers’ fears that there may be hidden problems with the property.
  • East: The east represents prosperity, harmony and family life. Find a wooden object, something green or an object featuring the number 3 and place it here in order to attract buyers.

Even if the person selling a property does not believe in the principles of feng shui , in the current recession it may be worth giving it a try. Sellers may feel that feng shui is simply superstition but it is worth remembering that successful property developers have to take seriously the beliefs of their target market. Many new property developments have houses which omit the number 13 since people in the west think it’s’ unlucky.

In a similar way someone from China would be unlikely to make an offer on a house if it is number 4, as 4 sounds like “death” in Chinese. One London Builder recently omitted numbers 4, 13, 14 and 24 from their new apartments – so they were obviously taking no chances!

For a good general introduction to the principles of feng shui read “The Complete Idiot’s Guide To Feng Shui” by Elizabeth Moran, Val Biktashev, Joseph Yu, in paperback, Alpha Books

What Makes A Successful Entrepreneur?

The following post is a guest post by CEO and Founder of the Brabble social network Pat Mackaronis.

Successful entrepreneurs refuse to be confined into a set way of thinking. They constantly attempt to look at things in ways never imagined; in ways that boggle the very mind that perceived the thought. By thinking outside of the box, a successful entrepreneur always imagines the outcome of doing something in a different way. The thrill to find out the final result makes the successful entrepreneur challenge existing norms and identify alternate or complimentary methods to achieve the same or even greater results.

Working With Passion

The only way one can truly be successful in any venture is by being passionate in any undertaking. Successful entrepreneurs realize that the reason they keep going on at something is because they are devoted and have a genuine desire to keep working and going at their ideas. Passion is a product of self-drive. Success is always measured in how much commitment is put into it, and how much effort was devoted.

Constantly Learning

Any successful entrepreneur is always on a learning curve. The thirst to keep knowing, and seeking information is paramount in remaining at the top of entrepreneurial success. Successful entrepreneurs not only learn from what they read, see, or hear, they also learn a lot from their own mistakes. Misjudgments are due to occur in entrepreneurship- learning, and moving forward, takes a learning attitude.

Perseverance and Consistency

Perseverance calls for staying the course no matter the outcome, consistency calls for remaining firm in what one is doing without faltering. Entrepreneurship success is invalid if the entrepreneur is weak or easily gets discouraged. It calls for taking heart in the midst of storms; it asks for never giving up and remaining hopeful and determined that the business will work out one way or the other. Remaining true and refusing to alter one’s thinking when discouragement comes knocking makes a sturdy and strong entrepreneur.

Self Belief

A belief in the self is a major asset to any successful entrepreneur. Most successful entrepreneurs do not necessarily seek nor need the approval of others what they conceive a business idea. It is important for the successful entrepreneur to be self-confident and have faultless belief that whatever they have conceived in their hearts or perceived in their minds is a reality that can come alive. Discouragements may come from close friends, family, and even acquaintances, but for as long as the dream is still there and the plan still viable, the source of inspiration and strength will always remain in the self.

Risk Taking

Successful entrepreneurs carry on elements of risk. It is crucial however to note that their levels of risk is not as high contrary to popular belief that it is. Risk taking is carefully thought out and plans of action drawn. If the risk is too high, successful entrepreneurs shy away from such ventures or propositions. Risk taking is calculated, measured against objectives and realities and weighed against the sacrifices and gains that need to be made. Not being optimists or pessimists, successful entrepreneurs are realistic in their risk-taking.

Money Managers

The most important element of any entrepreneurial undertaking is money. Successful entrepreneurs understand the dynamics of money very well. They are prudent in its usage and its acquisition. They understand that money can disappear probable faster than it was made and make every effort in ensuring the business has consistent cash flows to take care of both short-term and long-term needs.

Business Managers

Managing a business involved managing every variable instrumental in sustaining a business. This involves the management of staff, operations and external clients. Successful entrepreneurs treat their employees well and have good rapport with their clients. They run their businesses with professionalism and set high standards to be adhered to within their business ventures.